EY: ‘political point scoring’ leaving UK renewables sector in state of uncertainty
Ernst & Young (EY) has warned that “political point scoring over rising energy bills has intensified energy policy tensions across the various parties”, and as a result is placing investment in renewables at risk.
The firm added that the disagreements between the three main political parties suggest “unharmonious times ahead”.
Ben Warren, UK environment finance leader at EY, said, “We talk about the impact of policy and regulation on renewable energy markets’ stability and attractiveness, but it is too often politics, not policy, in the driving seat.
“We only need to look at the US, UK, Germany, Australia and Poland to find boom-bust cycles, delayed investment, abandoned projects and market exits.”
Despite this, the UK continues to rank fourth in the Renewable Energy Country Attractiveness Index (RECAI), only being beaten by the US, China and Germany. The UK also holds on to the top position for investment in offshore wind and ranked sixth and seventh respectively for biomass and solar PV investments.
Warren added that renewable technology innovation “represents a huge opportunity”. The Intergovernmental Panel on Climate Change’s (IPCC) latest report, which found human activity was almost certainly causing global warming, coupled with population growth, accelerated urbanisation, and increasing consumption in emerging markets, “highlights the desperate need to focus on tomorrow’s low-carbon energy strategies”, he concluded.
The RECAI also looked at how pension funds can affect the industry.
“With around $28 trillion in assets under management, pensions funds may well prove to be the sleeping giant that could transform the financing landscape for renewables in the decades ahead”, the report said.
A recent study by the charity ShareAction said that pension funds lacked “accountability and transparency” and that the people who put their savings in them should have more say about the way their money is invested. David Powell, economics campaigner at Friends of the Earth, wrote an article for Blue and Green Tomorrow about why our pension funds need to go on a “fossil fuel diet”.
The Government Pension Fund of Norway, the world’s largest sovereign wealth fund, and Qatar’s sovereign wealth fund have both stated they are considering more ethical and sustainable investments recently.
EY added that in a recent survey, 34% of pensions funds cited greater transparency of potential investment as a driver for renewable energy infrastructure investments. Greater certainty of government support and policy (34%) and greater in-house expertise in renewable energy infrastructure investing (29%) were also highlighted as key drivers.
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